OPEC+ is considering oil cuts of over 1 million barrels per day

DUBAI, Oct 2 (Reuters) – OPEC+ will consider an oil production cut of more than a million barrels per day (bpd) next week, OPEC sources said on Sunday, in what would be the biggest move yet since the COVID-19 pandemic . address the weakness in the oil market.

The meeting will take place on October 5 amid falling oil prices and months of severe market volatility that prompted top OPEC+ producer Saudi Arabia to say the group could cut production.

OPEC+, which combines OPEC countries and allies such as Russia, has refused to increase production at lower oil prices despite pressure from major consumers, including the United States, to help the global economy.

Prices have nevertheless fallen sharply in the past month due to fears about the world economy and a rise in the US dollar after the Federal Reserve raised interest rates.

A significant output cut is poised to anger the United States, which has put pressure on Saudi Arabia to keep pumping more to help oil prices soften further and reduce revenues for Russia as the West seeks to punish Moscow for sending troops to Ukraine.

The West accuses Russia of invading Ukraine, but the Kremlin calls it a special military operation.

Saudi Arabia has not condemned Moscow’s actions amid difficult relations with the administration of US President Joe Biden.

Last week, a source familiar with Russian thinking said Moscow wants to see OPEC+ cut 1 million bpd or one percent of global supply.

It would be the biggest cut since 2020 when OPEC+ cut output by a record 10 million bpd as demand crashed due to the COVID pandemic. The group spent the next two years winding down these record cuts.

On Sunday, the sources said the cut could exceed 1 million bpd. One of the sources suggested that cuts could also include a voluntary further reduction in production from Saudi Arabia.

OPEC+ will meet in person in Vienna for the first time since March 2020.

Analysts and OPEC watchers such as UBS and JP Morgan have in recent days suggested a cut of around 1 million bpd is on the cards and could help stop the price slide.

“$90 oil is not negotiable for OPEC+ management and so they will act to secure this price floor,” said Stephen Brennock of oil broker PVM.

Reporting by Maha El Dahan, Olesya Astakhova and Alex Lawler; Editing by Gareth Jones, Jan Harvey and Raissa Kasolowsky

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